Hyderabad-based Penna Cement Industries Ltd has received approval from the Securities and Exchange Board of India (SEBI) to float an initial public offering (IPO).
The capital markets regulator issued its final observations on Penna Cements’ IPO proposal on 31 May, according to information available on the SEBI website. Fourteen companies, including Penna, have now received SEBI’s nods so far this year, to float IPOs. Last year, SEBI had approved 72 IPO proposals. The regulator had cleared 46 IPO plans in 2017.
Penna filed its draft prospectus with SEBI on 5 November. Its proposed IPO size is Rs 1,550 crore. The offer comprises fresh shares worth Rs 1,300 crore and shares worth Rs 250 crore of promoter PR Cement Holdings Ltd.
Penna will join peer Emami Cement Ltd, part of the diversified Emami Group, in going public.
Emami Cement had filed for an IPO in October last year.
Nearly three dozen small and big cement firms are listed on Indian stock exchanges. Aditya Birla Group firm UltraTech Cement Ltd is India’s largest cement maker by installed capacity as well as by market capitalisation.
India’s cement sector has witnessed heightened deal activity owing to consolidation in the space. The sector had been going through a slowdown over the past few years because of oversupply.
That may change as incremental demand is likely to outpace incremental supply over the next three years owing to the government’s focus on housing and infrastructure as well as the waning impact of demonetisation, goods and services tax and the Real Estate Regulation Act, ratings firm CRISIL said in a recent report.
Penna will use Rs 1,000 crore of the fresh net proceeds to repay or make advance payment of its debt besides using an undisclosed amount towards general corporate purposes.
Edelweiss Financial Services, IIFL Holdings, JM Financial and Yes Securities (India) are the merchant bankers arranging the share sale.
Incorporated in October 1991, Penna is one of the largest privately-held cement firms and is among the leading players in south India.
The company has four manufacturing facilities and two grinding units in states including Andhra Pradesh, Telangana, and Maharashtra. It boasted an aggregate production capacity of 10 million tonnes per annum (MPTA) as on June-end 2018.
Penna is looking to increase its capacity to 16.5 MPTA.
Penna had a distribution network of 3,492 dealers and distributors across India as on 30 September 2018.
Some of the company’s key clients include large infrastructure and real estate companies Larsen & Toubro, Aparna Enterprises, JMC Projects (India), Brigade Enterprises, Gannon Dunkerley and Co., Visaka Industries and Puravankara.